City Launches $24-Million Quake Repair Loan Program : Recovery: Private lenders will channel funds from tax-exempt bonds to owners of about 500 properties. Aim is to restore damaged housing.

For an apartment building, it was very young--only six years old--when the Northridge quake rattled its foundation, shattering windows, cracking walls and chasing its tenants into the street.

Like hundreds of other quake-damaged buildings citywide, the 18-unit complex on Saticoy Street in Canoga Park might have been demolished or simply left to gather cobwebs until its owner could scrape together enough money for repairs.

But on Thursday, that building and many others got a new lease on life when Los Angeles Mayor Richard Riordan and city housing officials held a news conference there to launch a $24-million reconstruction loan program.

The latest of several quake-assistance programs offered by the city, the so-called Loans-to-Lenders program will use tax-exempt bonds and the help of private banks and lending institutions to finance repairs of about 500 properties citywide.

Home Savings of America and First Federal Bank will use the $24 million generated by the bonds to offer low-interest loans to owners and potential owners of quake-damaged properties. The banks also will take responsibility for paying off the bonds.

“The bottom line is that building owners can refinance their properties at a lower interest rate, which makes more money available for reconstruction and repair of earthquake-damaged buildings,” Riordan said before signing the documents to issue the bonds.

Riordan and others lauded the program, saying the money will make it more attractive for current owners to rebuild and for new owners to buy quake-damaged properties. Unlike other city or federal disaster loan programs, they said, this approach provides flexible financing and can begin distributing money as early as Sept. 1.

The crack-laced building in the 21000 block of Saticoy Street where the program was launched will be the first to benefit, receiving a loan of about $600,000 for repairs.

“This 18-unit building demonstrates the challenge,” said Councilwoman Laura Chick, whose district includes the Canoga Park complex. “With no action, this building and others would remain an eyesore.”

Although two or three other quake-damaged buildings sit vacant in that same neighborhood, the building is not within one of the 12 city-designated quake “ghost towns”--clusters of damaged structures in the San Fernando Valley, Hollywood and Mid-City.

But city officials said they expect that the building and those around it will soon be declared a ghost town and thus will qualify for federally funded security measures, such as 24-hour security guards and fencing. Ghost town properties also have a higher priority for receiving federal loans.

The $1.5-million building is owned by Home Savings of America. Fredric Forster, president and chief operating officer of the bank, said the building would probably be worth only $500,000 if it were sold today, in its current condition.

In an unusual step, Forster said Home Savings of America will team up with a nonprofit organization to repair the building and then sell it to the nonprofit group, which will offer the units to low-income tenants at reduced rents.